by Stockwatch Business Reporter
West Texas Intermediate crude for October delivery added $1.88 to $40.16 on the New York Merc, while Brent for November added $1.69 to $42.22 (all figures in this para U.S.). Western Canadian Select traded at a discount of $11.20 to WTI, up from a discount of $11.25 Natural gas for October lost nine cents to $2.27. The TSX energy index added 2.24 points to close at 72.46.
Nine months after the first shovels hit the ground to build the Trans Mountain pipeline expansion, the project remains on budget and on schedule for completion in late 2022, according to Trans Mountain president and chief executive officer Ian Anderson. "We're making great progress," Mr. Anderson told The Canadian Press. He estimated that the project is currently about 15 per cent complete and should be at 30 per cent by the end of this year.
Moreover, said Mr. Anderson, the existing Trans Mountain pipeline has been doing well despite the effects of COVID-19. He boasted that the line ran at full capacity at the height of the downturn, unlike competing systems such as Enbridge's Mainline. This was attributed to Trans Mountain's ability to reach numerous markets in the United States, internationally and within Canada -- even far across Canada. In June, oil sands player Cenovus Energy Inc. (CVE: $5.74) used Trans Mountain to ship some crude to Burnaby, B.C., where it was then carried by tanker through the Panama Canal to a refinery in Saint John, N.B. Mr. Anderson acknowledged that this particular trip has not been repeated, but nonetheless illustrates Trans Mountain's reach.
In other pipeline news, the legal battle continues to rage over the Dakota Access pipeline, which carries crude out of the North Dakota Bakken play. Canadian producers in this play include Enerplus Corp. (ERF: $2.70) and PetroShale Inc. (PSH: $0.12). Back in July, a U.S. judge ordered a shutdown of the pipeline for an extended environmental review, though his order was temporarily stayed so a higher court can decide on whether a shutdown is truly necessary. The regulatory body that needs to carry out the review, the U.S. Army Corps, certainly does not think a shutdown is necessary. It has already started the review and has just launched the public comment phase. This comment period will run until Oct. 26. If the past is anything to go by, the Corps can expect plenty of form letters from anti-pipeline activists who oppose the project but not enough to write down an original thought. Fortunately, the pipeline has a good number of supporters as well. No fewer than 11 U.S. states filed a brief with the courts earlier this month, arguing that a shutdown of Dakota Access would hurt food supplies and harm American farmers. The states argued that the crude oil displaced from the pipeline would compete for space on rail cars. This could have devastating consequences, warned the states, such as rotting grain, higher food prices and potential food shortages.
The above-noted Enerplus Corp. (ERF) added 18 cents to $2.70 on 2.18 million shares, after loudly hopping aboard the ESG bandwagon. ESG stands for environmental, social and governance. Energy companies have already been monitoring their ESG performance for years, but with many institutions and investors now basing at least part of their investment decisions on ESG criteria, it is increasingly important to make a big green racket. Enerplus announced this morning that it has set itself a goal of cutting its greenhouse gas emissions in half by 2030. As well, it said it is already on track to reduce its emissions by 20 to 25 per cent this year, exceeding its initial target of 10 per cent. The company also set targets on reusing water and lowering injury rates.
Investors seemed encouraged by the report, which was generally quite practical, if less high-fashion than some of the others that have come out recently. The above-mentioned Cenovus Energy, for example, has an "aspirational" target of net-zero emissions by 2050 ("aspirational" meaning it relies on technology that does not yet exist), while the below-mentioned Husky Energy Inc. (HSE) made headlines in August by setting a "gender diversity" target (which inevitably offends the idea of meritocracy, regardless of the potential benefits listed by proponents). In any case, Enerplus's stock had a good day. Of course, with the stock having plunged over the last month to around $2.50 from over $4, a correction was likely in order.
Turning to Husky Energy Inc. (HSE), it edged up three cents to $3.62 on 8.24 million shares. No doubt some of its employees (past or current) were out this afternoon at the Confederation Building in St. John's, Nfld., for a rally in support of the province's offshore oil industry. The rally seems to have been organized by Unifor, with support from Noia (the Newfoundland and Labrador Oil and Gas Industries Association). Husky promoted the rally on its Twitter page. It has good reason to draw attention to the issue: One week ago, Husky launched a "full review" of its West White Rose expansion project off the coast of Newfoundland, suggesting that it might walk away. "Sustaining project costs through a long delay in a negative economic environment is not an option," said CEO Rob Peabody. He added that Husky was also, by extension, reviewing all of its future operations in Atlantic Canada. Husky is a sizable employer and contributor to the region's economy; its departure would be painful. Mr. Peabody went on to muse that the federal and/or provincial governments could step in to help West White Rose -- much like Ottawa invested in the Hibernia field many years ago, an investment that is still providing returns -- and thus encourage Husky to stay put.
Now Husky has created its own website to keep hammering home this idea. The website, called Support NL Jobs -- no subtlety there -- claims that the West White Rose expansion is "critical" to the future of the already-producing White Rose field. White Rose is a joint venture among Husky, Suncor Energy Inc. (SU: $17.96) and provincial Crown corporation Nalcor. The field produced about 17,500 gross barrels a day in 2019. The West White Rose expansion was set to add 75,000 gross barrels a day in 2022, until the joint venturers suspended construction in March because of COVID-19. Construction at the time was about 60 per cent complete. Husky's new website reckons that $1.1-billion is needed to finish the job. To entice the government to open its wallet, the website makes frequent mention of how many thousands of jobs will be supported and how many billions of dollars will flow into the economy. Those are the carrots, here is the stick: "Without West White Rose," intones the website, "the future of Husky's Atlantic operations -- jobs and investment -- are at risk." Husky is hoping to hear back from the government by November in order to resume construction in 2021.